Papua New Guinea: Sixth Reviews Under the Extended Arrangement Under the Extended Fund Facility and the Arrangement Under the Extended Credit Facility, Request for a Waiver of Nonobservance of Performance Criterion, and Second Review Under the Resilience and Sustainability Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Papua New Guinea

This paper presents Papua New Guinea’s Fifth Reviews under the Extended Arrangement under the Extended Fund Facility and the Arrangement under the Extended Credit Facility, Request for a Waiver of Nonobservance of Performance Criterion, and Second Review under the Resilience and Sustainability Facility Arrangement. Despite a fragile socio-political environment, Papua New Guinea has made steady progress in implementing its reform agenda, reflecting strong policy commitment and improving macroeconomic stability. Fiscal consolidation has advanced through stronger revenue mobilization and expenditure rationalization, while exchange rate reforms have reduced Kina overvaluation and eased foreign exchange shortages. Reforms have also strengthened the governance and operational autonomy of the Bank of Papua New Guinea, enhanced governance frameworks, and addressed climate-related balance of payments risks. The successful reduction of the fiscal deficit, alongside planned consolidation in 2026, underscores the importance of sustained revenue reforms, prudent expenditure management, and more efficient public investment to reduce debt vulnerabilities. Looking ahead, building resilience to climate change through stronger disaster risk management, climate-sensitive infrastructure governance, expanded climate finance, and incentives for forest conservation and fuel efficiency will be critical to supporting sustainable, inclusive, and resilient long-term economic growth.